The novel coronavirus pandemic is set to cost Ghana GHS9.505 billion, according to Ken Ofori-Atta, the Finance Minister.
This will be 2.5 percent of Ghana’s revised GDP.
“Speaker, the total estimated fiscal impact from the shortfall in petroleum receipts, shortfall import duties, the shortfall in other tax revenues, the cost of the preparedness plan, and the cost of Coronavirus Alleviation Programme is GHS9,505 million,” he said when he appeared in Parliament on Monday, March 30.
Ultimately, there will be a “fiscal gap of GHS11.4 billion,” the Minister added.
Import duties, for example, will fall short of target by GHS808 million for the 2020 fiscal year, the Minister indicated.
The effect of the virus on the economy will worsen because Ghana just began a two-week partial lock-down of Accra, Tema, Kumasi and Kasoa.
The pandemic will also take a toll on Ghana’s GDP growth.
Mr. Ofori-Atta said a preliminary analysis of the impact of the virus “on the real sector shows that the 2020 projected real GDP growth rate could decline from 8 percent to 2.6 percent with an outbreak, and 1.5 percent with a partial lock-down.”
The Minister also explained that “the overall fiscal deficit will increase from the programmed GHȼ18.9 billion to GHȼ30.2 billion, which will be 7.8 percent of revised GDP.”
“The primary balance will correspondingly worsen from a surplus of GHȼ2,811 billion (0.7 percent of GDP) to a deficit of GHȼ5.6 billion (1.4 percent of GDP),” he added.
Mr. Ofori-Atta also announced that the GHS1 billion Coronavirus Alleviation Programme will be funded from the Ghana Stabilisation Fund.
The Minister is also seeking the support of Parliament to amend the relevant laws to lower the cap of the Stabilization Fund from $300 million to $100 million to enable the government scoop the excess funds to bridge the gap created by the economic impact of the pandemic.
Mr. Ofori Atta said the equivalent of the $100 million announced by the President to help with Ghana’s handling of the virus is ready.
“I wish to assure that the money has been secured and is available to be disbursed in accordance with public financial management procedure.”